In a recent financial disclosure, American Outdoor Brands , Inc. (NASDAQ: NASDAQ:AOUT) revealed a notable 23% growth in its third-quarter fiscal 2024 results compared to the pre-pandemic period, with net sales climbing by 5% to $53.4 million.
The company experienced growth across its Outdoor Lifestyle and Shooting Sports categories, with respective increases of 2.8% and 7.6%. Despite higher tariff and freight costs impacting gross margins, which decreased to 42.7%, the company has strengthened its balance sheet, ending the quarter with substantial cash reserves and no debt.
American Outdoor Brands also reported strategic moves, including the acquisition of Grilla, and shared expectations for continued growth, albeit at a lower single-digit rate in the fourth quarter.
Key Takeaways
- American Outdoor Brands reported a 5% increase in net sales, reaching $53.4 million.
- The Outdoor Lifestyle category grew by almost 3%, while Shooting Sports saw an almost 8% increase.
- Traditional sales channels grew by 8.1%, with e-commerce showing a 1.6% increase.
- Gross margins decreased to 42.7% due to higher tariffs and freight costs.
- The company ended the quarter with $15.9 million in cash and no debt, having repurchased 210,000 shares.
- Expectations for the full fiscal year include up to 3.5% growth in net sales and gross margins of approximately 44%.
- The acquisition of Grilla was highlighted, marking a strategic move in the outdoor cooking market.
- A low single-digit growth rate is anticipated for the fourth quarter due to seasonality.
- The company emphasized the importance of aligning sell-in with sell-through at retail and is preparing for new product launches.
Company Outlook
- American Outdoor Brands expects full-year net sales growth of up to 3.5%.
- Gross margins are projected to be around 44% for the full year.
Bearish Highlights
- The company witnessed a decline in gross margin to 42.7% from 47.1% last year.
Bullish Highlights
- Strong sales performance in both Outdoor Lifestyle and Shooting Sports categories.
- Positive inventory management through improved product and point-of-sale data linkage.
- Successful balance sheet strengthening with significant cash reserves and share repurchases.
Misses
- The increase in net sales was tempered by a decrease in gross margins due to external cost pressures.
Q&A highlights
- The acquisition of Grilla is a strategic move to bolster the company's presence in outdoor cooking.
- New product launches and the addition of new retailers are set to contribute to higher load-ins.
- The company is actively pursuing acquisition opportunities with a clear target perspective.
- Participation in the upcoming ROTH Conference was confirmed.
American Outdoor Brands, Inc. has demonstrated resilience in the face of market challenges, charting a course for sustained growth. With strategic acquisitions like Grilla and a focus on innovative product offerings, AOB is positioning itself to capitalize on both current and future market opportunities. The company's proactive approach to inventory management and retailer relationships further underscores its commitment to operational excellence. As American Outdoor Brands continues to navigate the evolving landscape, its strategic decisions and financial results will be closely watched by investors and industry analysts alike.
InvestingPro Insights
In the wake of American Outdoor Brands' recent financial disclosure, a deeper analysis using InvestingPro data and insights reveals additional layers to the company's performance and potential. With a market capitalization of $108.67 million USD and a notable revenue of $194.47 million over the last twelve months as of Q2 2024, AOUT shows a complex financial picture.
InvestingPro Tips suggest management's confidence through aggressive share buybacks and an expectation of net income growth this year. These actions, coupled with analysts' predictions of profitability within the year, hint at a positive outlook for the company. However, it's worth noting that three analysts have revised their earnings estimates downwards for the upcoming period, which may warrant investor caution.
Key InvestingPro Data points include:
- A P/E Ratio (Adjusted) as of Q2 2024 standing at -10.16, reflecting current earnings challenges.
- A Price / Book ratio of 0.58, suggesting that the stock may be undervalued relative to its book value.
- Despite a -9.17% revenue growth over the last twelve months as of Q2 2024, the company has seen a quarterly revenue growth of 6.42%, indicating some recent improvement in sales.
Investors looking for a more comprehensive analysis can find over 9 additional InvestingPro Tips for AOUT at https://www.investing.com/pro/AOUT. To access these insights and enhance your investment strategy, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
Full transcript - American Outdoor Brands (AOUT) Q3 2024:
Operator: Good day, everyone, and welcome to American Outdoor Brands, Inc. Third Quarter Fiscal 2024 Financial Results Conference Call. This call is being recorded. At this time, I would like to turn the call over to Liz Sharp (OTC:SHCAY), Vice President of Investor Relations, for some information about today's call. Liz?
Liz Sharp: Thank you, and good afternoon. Our comments today may contain predictions, estimates and other forward-looking statements. Our use of words like anticipate, project, estimate, expect, intend, should, could, indicate, suggest, believe and other similar expressions is intended to identify those forward-looking statements. Forward-looking statements also include statements regarding our product development, focus, objectives, strategies and vision, our strategic evolution, our market share and market demand for our products, market and inventory conditions related to our products and in our industry in general, and growth opportunities and trends. Our forward-looking statements represent our current judgment about the future, and they are subject to various risks and uncertainties. Risk factors and other considerations that could cause our actual results to be materially different are described in our securities filings. You can find those documents, as well as a replay of this call on our website at aob.com. Today's call contains time-sensitive information that is accurate only as of this time, and we assume no obligation to update any forward-looking statements. Our actual results could differ materially from our statements today. I have a few important items to note about our comments on today's call. First, we reference certain non-GAAP financial measures. Our non-GAAP results exclude amortization of acquired intangible assets, stock compensation, shareholder cooperation agreement costs, facility consolidation costs, technology implementation, acquisition costs, other costs and income tax adjustments. The reconciliations of GAAP financial measures to non-GAAP financial measures, whether they are discussed on today's call, can be found in our filings, as well as today's earnings press release, which are posted on our website. Also, when we reference EPS, we are always referencing fully-diluted EPS. Joining us on today's call is Brian Murphy, President and CEO and Andy Fulmer, CFO. And with that, I will turn the call over to Brian.
Brian Murphy: Thanks, Liz, and thanks, everyone, for joining us. We delivered a solid third quarter, and I'm very pleased with our results, which included top line sales growth, disciplined capital management and the unveiling of several strategically important product introductions that we believe expand our brands' runway for growth. I believe our results demonstrate our ability to remain focused on our long-term strategy, while successfully navigating the near-term environment. Our third quarter sales reflect a growth of more than 23% over our pre-pandemic third quarter of fiscal 2020, including our acquisition of Grilla Grills in fiscal 2022. For the third quarter, we delivered net sales growth of 5%, a result that came in ahead of our expectations and was supported by our diverse portfolio, evidenced by stronger sales across a number of brands within our Shooting Sports and Outdoor Lifestyle categories, which both delivered net sales growth. In addition, our e-commerce and traditional channels experienced net sales growth in the quarter. In our Outdoor Lifestyle category, which consists of products related to hunting, fishing, camping, outdoor cooking and rugged outdoor activities, we delivered third quarter year-over-year growth of 2.8%. That growth was led by strength in our hunting and fishing-related products and reflected the success of our strategy to identify incremental retail opportunities, including the expansion of our MEAT! Your Maker meat processing equipment into the retail channel last quarter. On a long-term basis, our Outdoor Lifestyle category has grown more than 43% compared to the pre-pandemic third quarter of fiscal 2020, including the Grilla acquisition. I believe this result reflects the success of our strategy to grow this part of our business. In fact, our Outdoor Lifestyle category comprised over 54% of our total net sales in the third quarter. Turning now to our Shooting Sports category, which includes solutions for target shooting, aiming, safe storage, cleaning and maintenance, and personal protection. We delivered growth of 7.6% compared to the prior year. This result was led by our ability to clear some slower moving inventory in the personal protection category, combined with stronger sales in shooting accessories. We are especially pleased with this result, given reports from firearm manufacturers in the quarter that continued to cite reduced consumer demand. With regard to channel sales in the third quarter, we delivered sales growth in both our traditional and e-commerce channels, reflecting our strategy to ensure that our brands meet the consumer wherever they shop. We also delivered sales growth in our domestic and international channels, reflecting our strategy to expand into international markets. In fact, our international sales grew by over 72% in the quarter, the result of introducing more of our lifestyle brands to the Canadian market. With regard to sell-through, we gather point-of-sale and channel inventory data from retailers that represent about half of our sales. We were pleased with our POS results this quarter. POS sales increased for both our Outdoor Lifestyle and Shooting Sports categories. Now, turning to innovation, which is core to our long-term growth strategy. Our ability to innovate allows us to drive growth by entering new product categories, and it's driven by our Dock and Unlock process. Our approach often consists of creating a new product with proprietary IP and using that product to establish a beachhead for a given brand. From there, we fan out, developing incremental products that allow us to enter new product categories and move from that single point of entry to a full family of products that build upon the brand's familiarity and its loyal following. We've proven the success of this approach in the past with our BUBBA brand, moving from a single manual fillet knife to a full family of fishing products that now includes our BUBBA Pro Series Smart Fish Scale, which was rapidly adopted and is now the official scale for Major League Fishing. In the third quarter, we again demonstrated the success of this approach by unveiling a number of innovative and internally developed new products under our Caldwell, Grilla and Hooyman brands. I believe these products represent the tip of the iceberg as we execute against a robust new product pipeline that extends well into the next 5 years, providing us with a long-term competitive advantage, and uniquely positioning our brands to expand market share, enter new product categories and markets, and broaden our distribution channels. Now, let me share some of the exciting product details. In a sea of electric clay throwers, most powered by wires connected to a 40-pound car battery, Caldwell caught the attention of clay shooters last year when we introduced the world's first battery-free, foot-operated clay thrower with a stackable clay hopper called the Claymore. It has been very successful, to say the least. When developing the Claymore, we also stumbled upon a gap in the marketplace. There were few product offerings available between the two main types of clay throwers. Handheld, which are generally entry-level and lower priced and stationary clay throwers, which tend to be much more expensive. Our solution, the Caldwell Claymore Solo which leverages the same battery-free mechanics of the original Claymore, but loads and throws one clay at a time instead of being stack fed. Because of this, it's remarkably light at just 15 pounds, half the weight of the original Claymore, and competitively priced, filling a gap with innovation and extreme value. But we didn't stop there. We looked at the clay thrower market and wondered why consumers had to compromise throwing distance when choosing between a handheld thrower and a stationary one. We also recognized the benefit of being able to change the angle of the target with a handheld thrower. However, most like the ability to securely hold a clay in place when tilting the thrower before release. We solved both of these problems with the Caldwell Claymore PullPup. Our new handheld thrower can easily launch clay targets over 55 yards, while our dual grip design, combined with a unique holding clip, enables users to easily launch targets off camber at a variety of angles. Next, we saw an opportunity for our new Grilla brand to fulfill its promise to help consumers evolve their backyard. One of the benefits of owning a brand that's entirely direct to consumer is the closer connection it brings to the actual user, including product ideas. Grilla consumers expressed frustration with the vertical smoker offerings from competitors. Feedback included lack of space, limited meat rack and hanging options, poor smoke generation, and few options to control and monitor cooking. We've solved all of those problems with the new Mammoth vertical smoker, which features over 1,600 square inches of smoking space, accommodates up to 10 racks and 24 hangers, puts out a generous amount of smoke using our proprietary lift heat deflector, and utilizes our new Alpha Connect 2.0 controller to control and monitor cooking. The Mammoth absolutely hit the mark, and we continue to sell out each new container of Mammoth vertical smokers as they arrive, demonstrating the powerful nature of Grilla's connection with the consumer. Lastly, as our Hooyman brand has expanded into land management products, we've identified several categories riddled with consumer pain points ripe for innovation. One such area is seed spreaders; seed can be very expensive. And if you need to cover a large area, two considerations stand out, speed and precision. After releasing our first seed spreader last year, the Hooyman chest-mounted spreader, we turned our attention to high-capacity spreaders. These are commonly mounted to vehicles, including ATVs. We discovered that in addition to speed and precision, users had to overcome two additional pain points with vehicle-mounted spreaders. One, an overly cumbersome attachment process, and two, frustration from seed spilling from the hopper anytime precision and distance adjustments were made. Our new 125-pound capacity Hooyman vehicle spreaders solved all of these problems, enabling the user to attach our spreader in under 60 seconds and adjust the spreader's accuracy without compromising valuable seed. With these products in hand, we attended SHOT Show in January, an annual industry event that is generally focused on new shooting-related products. Our Caldwell brand is always popular at SHOT, and the new Claymore products were extremely well received. And while attendees weren't surprised to see Caldwell at the show, they were surprised and very interested to see a full Grilla outdoor kitchen setup, the new Mammoth smoker, our MEAT! Your Maker meat processing equipment, and our Hooyman product lineup, all of which were brand-new to SHOT, and the reception was tremendous. But most importantly, we were able to expose these brands to an entirely new audience, retailers and adjacent distribution channels. Increased and expanded distribution channel opportunities are one of our four growth avenues that comprise our long-term strategic plan, and they are particularly strategic given the current retail environment. As we've said on prior calls, the surge in consumer buying during the pandemic allowed retailers in our industry to become less selective when stocking their shelves. But today's consumer is more discerning, and retailers have shifted towards careful inventory management, seeking out compelling products that consumers truly want. At AOB, we believe that by introducing a steady stream of innovative solutions backed by enthusiast brands, we can capture market share, gain new placement and expand shelf space with retailers looking to draw on the consumer. With that, I'll turn it over to Andy to discuss our financial results.
Andy Fulmer: Thanks, Brian. Our third quarter results included growing our net sales over last year, strengthening our balance sheet and returning capital to shareholders, all while navigating the environment of consumer uncertainty and cautious retailer behavior that have marked the last few quarters. Let me walk you through the details. Net sales for Q3 of $53.4 million increased 5% over Q3 last year. These results were slightly ahead of our expectations by about $2.5 million, as certain orders we had originally expected in Q4 occurred in Q3. Compared to pre-pandemic Q3 of fiscal 2020, net sales increased by 23.3%, including the acquisition of Grilla. On a category basis, we saw growth in both Outdoor Lifestyle and Shooting Sports net sales. Compared to Q3 last year, Outdoor Lifestyle grew almost 3%, driven by fishing and hunting products, and Shooting Sports grew by almost 8%, driven by increases in both personal protection and shooting accessories. Compared to pre-pandemic Q3 of fiscal 2020, the Outdoor Lifestyle category grew by 43.1%, as Brian mentioned, and Shooting Sports grew by almost 6%. On a channel basis, traditional net sales increased by 8.1% and e-commerce increased by 1.6% compared to Q3 last year. As a reminder, our e-commerce channel includes direct-to-consumer sales from our own websites, as well as sales by online retailers that do not have brick-and-mortar stores. Direct-to-consumer sales in Q3 were up over the prior year, led by very strong Black Friday weekend sales of MEAT! and Grilla, as we outlined on our last call that strength was somewhat offset by lower sales to online retailers. Turning now to gross margin, as we discussed on our last call, inventory purchases in the first half of fiscal 2024 were higher than purchases in the first half of fiscal 2023, a period when we were actively driving down inventory levels in order to strengthen our balance sheet. The higher level of purchasing in Q1 and Q2 this year drove higher tariff and freight variances, which then must be amortized over inventory turns roughly 6 months later. That increased amortization, combined with a slightly higher level of promotional activity yielded gross margin for the third quarter of 42.7% compared to 47.1% in the third quarter last year. Turning to operating expenses, GAAP operating expenses for the quarter decreased $1.3 million to $25.7 million. The decrease was driven mainly by reduced G&A, resulting from lower insurance and IT costs and lower rent expense due to facility consolidations we completed last year. On a non-GAAP basis, operating expenses decreased in Q3 to $21.5 million compared to $22 million in Q3 of last year for the reasons I just outlined. Non-GAAP operating expenses exclude intangible amortization, stock compensation and certain non-recurring expenses as they occur. GAAP EPS was a loss of $0.23 for the third quarter compared to a loss of $0.21 in Q3 last year. On a non-GAAP basis, EPS was $0.08 in Q3 this year compared to $0.13 in the prior year. Our Q3 figures are based on our fully diluted share count of approximately 12.9 million shares. For full fiscal 2024, we expect our fully diluted share count will be about 13.3 million shares. Adjusted EBITDAS for the quarter was $2.4 million compared to $3.3 million last year. Turning to the balance sheet and cash flow, positive cash flow in the third quarter helped us continue to strengthen our balance sheet. We ended the third quarter with cash of $15.9 million and no debt after repurchasing approximately $1.8 million of our common stock. On prior calls, we've outlined that the seasonal nature of our business typically results in operating cash outflow in the first half of the year when we experience increases in accounts receivable and inventory. This is typically followed by positive cash inflow in the second half of the year as we collect those receivables and lower our inventory levels. This pattern is playing out as expected in fiscal 2024. We generated $13 million of operating cash in Q3, and we expect to generate cash in Q4. Operating cash inflow in Q3 was mainly driven by a decrease in accounts receivable of $13.2 million and a decrease of inventory of $9.1 million, netted by a decrease in accounts payable of $8.4 million. The team did an excellent job lowering our inventory levels more quickly than expected, and therefore, we expect inventories to be roughly flat from Q3 to Q4. Our balance sheet remains debt free. We ended the quarter with no outstanding balance on our $75 million expandable line of credit, and we now have total available capital of roughly $106 million. With regard to capital expenditures, we spent $3.7 million on CapEx in the third quarter. Roughly $2.9 million of this spending was from a planned one-time purchase of assets relating to the full lease assumption of our Columbia, Missouri headquarters. We have lowered our planned CapEx spending for the full year by $500,000, and we now expect total CapEx spend for fiscal 2024 to be between $6 million and $6.5 million, of which approximately $3 million to $3.5 million is recurring. Finally, a key capital allocation priority for our company is returning capital to shareholders through our share repurchase program. In Q3, we repurchased roughly 210,000 shares for $1.8 million at an average price of $8.50 per share. At the end of Q3, we had $7.8 million of availability remaining on our $10 million share repurchase program through September 2024. Now, turning to our outlook, our net sales outlook remains unchanged, and we continue to believe that fiscal 2024 could deliver full year net sales growth of up to 3.5%. Turning to gross margins, we expect to see gross margins come in at approximately 44% on a full fiscal 2024 basis, which would imply a decline in Q4 gross margins from last year. This expected decline is due to the higher tariff and freight cost amortization that I discussed earlier. With regard to OpEx, we continue to believe that overall operating expenses will decline slightly on a GAAP basis for fiscal 2024 as a result of reductions from facility consolidations, lower one-time legal and advisory fees, and lower IT implementation costs, offset by higher selling and distribution costs. On a non-GAAP basis, we expect that OpEx will increase slightly, mainly due to the higher selling and distribution costs. And recall here that we have SHOT Show in our third quarter, which adds selling and marketing costs in Q3 that don't occur in Q4. Based on these factors, we expect our adjusted EBITDAS margin for the full fiscal 2024 to be between 4.5% and 5%. Brian?
Brian Murphy: Thank you, Andy. I believe our third quarter results demonstrate our ability to manage the elements within our control, delivering growth, innovation and a loyal customer base for our popular brands, while prudently managing our capital to allow us to invest in our long-term growth. We have a great portfolio of authentic lifestyle brands and a growing lineup of exciting and innovative products that continue to resonate with enthusiasts who are passionate about their outdoor activities. With that, operator, please open the call for questions from our analysts.
Operator: [Operator Instructions] Today's first question comes from Mark Smith with Lake Street Capital Markets.
Aaron Wright: This is Aaron on the line for Mark. Congrats on the quarter. So I guess to start, kind of just wondering if you can kind of unpack the inventory levels at retailers a little bit. I know you had some commentary in the prepared remarks there. But have you seen any improvement since last quarter? And I'm also just kind of curious just on your general level of confidence that you guys are going to see some progress there moving forward here.
Brian Murphy: Yes. Was it Aaron?
Aaron Wright: Correct. Yes.
Brian Murphy: Okay. Aaron, this is Brian. So, yes, we said, look, POS was up in the quarter. We didn't give any insight into inventory. Inventory was down in the channel, which is up a little bit in Outdoor Lifestyle because of part of the MEAT! load-in and the work with Academy. But excluding that, on both sides of the fence, Outdoor Lifestyle and Shooting Sports, inventory was down. So that's positive. And then, I'd say just some context or color, like we said, we were at SHOT Show in Vegas, and we meet with a lot of our big retailers. Inventory destocking just was not a top priority there. So we're mostly focused on getting into a normal cadence. Looking forward to the next year, the big theme that we took away was innovation, which obviously is where we play. That's one of our strengths. So less of a factor, and I think we're seeing great pull-through at retail right now.
Aaron Wright: Great. That's very helpful. Thanks for that color. And then, in previous quarters, you've sort of remained focused on growing organically through your innovation efforts. And I guess R&D has been sort of at a comfortable level for you guys. So does your confidence with internal innovation efforts, I'm just curious, does it affect your appetite on the M&A markets to any degree?
Brian Murphy: Yes. This is Brian. It's a really good question. I think one of the things that most probably don't have as much insight into is, we talked about where we have permission to play, where our brands have permission to play. And that permission to play for our brands is what ultimately informs, I'd say, we have a 5-year growth plan of new products going forward. That's based on that permission to play. So when we look at acquisitions, we say, where don't our brands have permission to play? Or where can we augment maybe some of those plans? A good example of that would be with Grilla, right? One of the reasons we went up to Grilla, in addition to being a great direct-to-consumer brand and it has this differentiation with modular kitchens, is we were actually wanting to go into outdoor cooking with MEAT! Your Maker. And the more we went down that road and talking with consumers, we just felt like it wasn't the right fit. And so, that's what helped give us the conviction to go after Grilla was that we could take some of those innovations that we had developed, and we call it, putting it in the vault. We could take them out of the vault and then use them for some of those brands that we go acquire. So it's really where don't our brands have permission to play but we do as a company? And then, in some cases, where can we actually augment some of the innovation that we've already developed but may not have the right brand for, so that's really how we look at it and really helps inform our acquisitions.
Aaron Wright: Great. Yes. Totally understandable. Thanks for all that color, and again, congrats on the quarter.
Operator: The next question comes from Matt Koranda with ROTH MKM.
Mike Zabran: It's Mike Zabran on for Matt. Maybe just starting on the sales guide, it implies a low-single-digit growth rate in the fourth quarter, somewhere a bit below the third quarter growth. Any reason to expect the deceleration in growth in the fourth quarter¸ or are we more so just being conservative, given the continued caution from retailers?
Andy Fulmer: Mike, this is Andy. It's a great question. I would attribute it more to just the cyclical quarter-by-quarter seasonal nature of our business. So typically, Q2, Q3 are higher, Q4 is a little bit lower. So I wouldn't really put any more emphasis on that.
Mike Zabran: Got it. Okay. And maybe on channel inventory, you kind of talked about it earlier, but maybe just speak to what we're seeing in regards to sell-in versus sell-through at retail. And then, are there any areas where we see opportunity for higher load-in benefit looking ahead?
Brian Murphy: Sure. This is Brian. So yes, I think going back, gosh, two-plus years. We talked about, ultimately what we want to have is the closest link possible between sell-in and sell-through. We don't want to be have too much of our product in the channel. We want there to be as much of a tight link as possible so that when we see our POS data, it allows all of our internal teams, inventory management teams, our S&OP process to be able to order the right product and not have too much of it and get it here at the right time. So we feel like that, that link is pretty strong right now. We're not seeing a whole lot of slack in the system at least with our company. And then, I'm sorry, what was the second part of your question?
Mike Zabran: Just any areas where we see opportunity for higher load-in ahead? We talked about it happening a little bit in this quarter.
Brian Murphy: Yes. So replens are, we're seeing great replenishment right now. And then, we've got new products that are always coming out. We've got some new products that are going to be hitting at the end of April and shipping to stores, so we'll see some benefit there. That should include some load-ins. And then, we haven't talked about next year yet, but certainly our conversations with retailers, line reviews that we had last fall that went very, very well, should go well for us and see some load-ins for those new products next year. In addition to new distribution, we've got some new retailers coming online that we're very excited about.
Mike Zabran: Got it. That's great to hear. Last one for me. We talked about balancing internal innovation versus M&A earlier in the Q&A. But maybe just speak to, I guess, your appetite to be acquisitive in the near term, maybe. The balance sheet looks great but just any changes on this front. Have we seen anything interesting, any developments there?
Brian Murphy: Yes. It's Brian again. And Andy, feel free to chime in. So generally, in terms of our philosophy, we tend to be a little bit more cautious when we see multiples go way up and the market becomes more frothy. We did Grilla over the last few years, but it was very selective and very targeted. And now, we're seeing sort of the M&A market has come down, slowed down a little bit. We're seeing signs of it beginning to pick back up; we're seeing a few more decks from banks with sell-side deals. And we couldn't be in a better position. Like you alluded to, we're in a great cash position. We have dry powder. We have no debt and so, we're on the hunt. We are actively looking, meeting with companies directly or through advisers. But we've got a great pipeline that we're executing against and you never know when one is going to hit. But we've got a very clear perspective on who it is that we need to go after, and we're executing on that.
Mike Zabran: Got it. That's off from me guys. Congrats on the quarter.
Operator: This concludes our question-and-answer session. I'd like to turn the call back over to Brian Murphy for closing remarks.
Brian Murphy: Thank you, operator. Before we close, I want to let everyone know that we'll be participating in the ROTH Conference in California on March 18 and 19 and hope to see some of you there. I want to also thank our employees for their dedication and our shareholders for their support. Thanks everyone for joining us today. We look forward to speaking with you again next quarter.
Operator: The conference has now concluded. Thank you for your participation. You may now disconnect your lines.
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